HRTX - Bull Thesis

Get your Free Big Mover Stocks to Watch report

BULL THESIS SUMMARY*

• HRTX overall corporate and executive summary

• HRTX has a very high short interest and positive news/momentum, could start a short squeeze stock price run up

• Despite cash issue currently, recent cost reduction shows that HRTX is focused on preserving cash and cutting spend

  • Appears focused on not diluting investors at these valuations

    • Loan seems more likely option than 2’ offering to raise cash this year

• There are several possible HRTX 2022 catalysts

  • Likely ex-US corp transaction for Zynrelef (should bring much-needed cash)

  • Possible FDA approval of HTX-019

  • Further upside CINV revenue and possible Zynrelef positive rev surprise

  • Zynrelef further label expansion studies completion and sNDA filing

• HRTX is an attractive biopharma/healthcare value play

• Very attractive enterprise value (EV) with sales of its lead product, ZYNRELEF, posed to increase dramatically in coming years as best local post-surgical pain med

• EV of ~$500M is cheap for a company with 3 approved products, including 1 with high growth potential

• Share price is slightly under 1/10 its 10-yr high in 2018

• Attractive M&A target if ZYNRELEF revenue gets to $100M+ w large market ($500M+) opportunity

• Headwinds to sales are coming down rapidly and pricing tailwinds now exist

• Expanded label from Dec 2021 expands market size from 2 million to 7 million (½ of target)

• Patients are returning for elective surgeries in post-pandemic healthcare

• Now Pass-thru status provides a financial incentive for major segment of market (hospital outpatient)

• ZYNRELEF is a differentiated pain relief product for post surgical pain

• Efficacy appears superior to its major competitors, Exparel and bupivacaine

• Supported by data from 3rd parties

• Positive catalysts ahead in label expansion studies with low-bars for success

• Expanded FDA label studies are pharmacokinetics and safety only

• Showed impressive 68% growth in demand units Q1 ‘22 vs Q4 ‘21

• HTX-019 PDUFA 9/17/22 provides low risk, possible upside in same market as ZYNRELEF

• Identical to CINVANTI but for ZYNRELEF post-op market

• Cancer care products

• CINVANTI and SUSTOL provide revenue base with upside post-pandemic and now that several generic entry points are in past

• ~10% revenue increase in ‘22 guidance over ‘21

JM/MV 7/3/22 (4/25/22)

---

BULL THESIS (Expanded Version re: products)

• Acute care pipeline

• Developing an acute care product franchise

• ZYNRELEF® - Despite week launch, still HRTX’s lead product - Approved in ‘21 for Postoperative Pain Management

• HTX-019 - Easy, low risk add-on for HRTX - 505(b)(2) for post-op nausea and vomiting

• HTX-034 - ON HOLD, but future opp as further improved version of ZYNRELEF out to 7 days using combination of active ingredients in HRTX’s other products

• ZYNRELEF

• Differentiated pain relief product for post surgical pain

• 1st approved July ‘21 with label expansion December ‘21

• Efficacy is superior to its major competitors, Exparel and bupivacaine

• Data from 3rd parties help to support that ZYNRELEF is superior to Exparel (Sah poster, ASA publications, and Spark trial)

• Exparel no better than generic bupivacaine at treating total-knee replacement pain

• Anesthesiology journal headline with reference to competitive Exparel “Liposomal Bupivacaine Is Not Superior to Standard Local Anesthetics.”

• ZYNRELEF may also improve walking distance after total knee replacement during physical therapy

• Showed impressive 68% growth in demand units Q1 ‘22 vs Q4 ‘21

• 80% reorder rate over 9 months seems excellent

• Upcoming ex-US deal should provide needed cash and some positive momentum for stock, depending on details of deal

• Upcoming expanded label study readouts for ‘22 are likely positive, low-bar catalysts

• C section data coming out soon (1.5 million procedures)

• Upcoming trials for shoulder and spine for further expanded FDA label are pharmacokinetics and safety, not efficacy, and HRTX has already shown this in multiple procedures

• Would get to 14 millions patients with expanded label

• Based on reset of label and covid, benchmarking to beat Exparel launch

• HTX-019 (aprepitant) injectable emulsion for post op nausea and vomiting (PONV)

• Lower risk 505(b)(2) filing

• Proprietary IV aprepitant (approved substance P/neurokinin-1 (NK1) receptor antagonist (RA) for PONV prevention

• Identical to CINVANTI, which has aprepitant as active ingredient, so much lower risk re: FDA approval

• Will fill bag of HRTX commercial team with more to sell in post-op pain

• PDUFA 9/17/22 provides possible upside in same market as ZYNRELEF

• HTX-034

• Further improved version of ZYNRELEF out to 7 days using combination of active ingredients in HRTX’s other products

• Phase 2 initiated 1st quarter 2021

• Oncology care pipeline

• 10% increased revenue guidance and Q1 ‘22 revenue performance are encouraging

• SUSTOL® for Chemotherapy-Induced Nausea and Vomiting Prevention (CINV): U.S. FDA approved as a subcutaneous injection

• $10M in sales in ‘21 and resetting of pricing behind, provides revenue with some upside

• CINVANTI® U.S. FDA approved as a 30-minute intravenous (IV) infusion and a 2-minute IV injection

• $75M annual revenue with 30 second infusion provides revenue with some upside

JM/MV 7/3/22 (previous 4/25/22)

See the bull/bear analysis in our BPIQ Pro Forum post here and the full bull/bear analysis w/ Amp view in our Amp Premium Forum post here. To become a subscriber Learn more here.